Bleak prospects for L.A. finances

The city will see declines in property taxes and license fees, while overall revenues will increase by a paltry 0.6 percent for 2011-2012, according to City Controller Wendy Greuel, who just issued her annual economic report. Business and sales taxes are expected to increase, which is at least something. Of course, the elephant in the room is a deficit of $350 million (that's on top of the current year's$54 million). It's not at all clear how that shortfall will be made up. From Controller's press release:

"I know that the cuts that the Mayor and City Council will be making in the coming weeks and months will be difficult and drastic. City government will look dramatically different in five years, both in its size and scope of the services provided," said City Controller Greuel. "The City needs to first identify which specific core functions it plans on providing to Angelenos and then shift our resources to meet those needs, not the other way around. For instance, furloughing or laying off employees in revenue generating positions seems counter-productive as the City explores opportunities to generate additional revenue. The services provided by City government should not be driven by what positions employees were able to transfer into, but by a clear policy on the City's priorities given the current - and looming - budget deficits."

Greuel is widely expected to run for mayor, and it'll be interesting to see how this sensible assessment holds up when it comes time campaign on a platform of austerity and restructuring. Perhaps the biggest concern is the city's General Fund, which has fallen by $126 million since 2006-07. This is a big deal because any shortfall in L.A.'s underfunded pension system must be made up by the city - even if it's at the expense of basic services like police and fire.